ZAMBIA: 2022 NATIONAL BUDGET AIMS TO REVITALISE THE COUNTRY’S ECONOMY
The Zambian Minister of Finance and National Planning, Dr Situmbeko Musokotwane, (Minister) delivered the 2022 National Budget Speech to the National Assembly on 29 October 2021, the first after a change of Government.
The Minister proposed ZMW 173 billion in spending, aimed at both supporting the country through the effects of extreme indebtedness and stimulating economic recovery in the wake of the COVID-19 pandemic.
The Budget— themed ‘Growth, Jobs and Taking Development Closer to the People’— is equivalent to 37.1% of the country’s gross domestic product (GDP), surpassing the 2021 Budget, which equalled 32.6% of GDP forecast for that year.
From extending pandemic business support, to putting in place legislation that promotes innovative financing for climate change interventions, the Budget outlines Government’s ambitious plan to rebuild the country in a way that ‘takes resources closer to the people through decentralisation’.
Further, the Minister underscored that Government’s focus will be to increase output in the agriculture, tourism, mining, manufacturing, energy and transport sectors, to grow the economy and to create employment opportunities.
To achieve the aims of the Budget, including increasing output in the above-mentioned sectors, attaining a GDP growth of at least 3.5%, and reducing inflation to a single digit, the Minister proposed to undertake major legislative and structural reforms.
Notable and cutting across all sectors, the Minister has proposed to reduce the standard corporate income tax rate (CIT) to 30% from 35% for corporate entities. This excludes the top marginal tax rate for telecommunications companies, which is maintained at 40%.
In this article, members of our Corporate Practice give their views on some of the business and tax reforms including:
- re-introducing fiscal incentives to promote manufacturing in economic zones - Bwalya Chilufya Musonda and Joshua Mwamulima;
- extending tourism fiscal relief for another year - Bwalya Chilufya Musonda and Joshua Mwamulima;
- re-introducing the deductibility of the mineral royalty for corporate income tax assessment purposes - Bwalya Chilufya Musonda and Nchimunya Nedziwe;
- introducing measures to support the agricultural and agro-processing sectors - Bwalya Chilufya Musonda and Joshua Mwamulima;
- using public-private partnerships (PPPs) to fund transport infrastructure - Bwalya Chilufya Musonda and Joshua Mwamulima; and
- using the insurance sector as a source of revenue - Bwalya Chilufya Musonda.